Judgment summary
The Tax Appeal Tribunal at Nairobi heard an appeal by Kawa Commercial Enterprises Limited against an Objection Decision of the Commissioner of Domestic Taxes dated 18th December 2024, which confirmed an additional assessment dated 26th August 2024.
The Tribunal identified two issues: whether the Commissioner's decision was valid, and whether the Respondent's assessment was justified. It found both the assessment and the Objection Decision to be valid and lawful, and held that the Appellant had not discharged its burden of proof to show the assessment was erroneous.
The appeal was dismissed and the Objection Decision was upheld, with each party bearing its own costs.
Background
The Appellant is a private limited company incorporated in Kenya whose principal activity is commercial real estate (para 1).
The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, Cap 469, mandated under Sections 5(1) and 5(2) to collect tax revenue and administer the written tax laws (para 2).
The Respondent issued additional assessments dated 26th August 2024 (para 3). The Appellant objected on 5th September 2024 (para 4). The Respondent issued its Objection Decision on 18th December 2024, confirming the assessment (para 5). The Appellant filed its Notice of Appeal dated 17th July 2025 (para 6).
Core dispute
The Appellant argued that the Respondent erred in law and fact by failing to consider that its VAT obligation was suspended in September 2021, under Section 36 of the VAT Act, 2013 and Section 10 of the Tax Procedures Act, 2015 (para 7a).
It also argued that the Respondent failed to consider all documents supplied in support of its objection before issuing the Objection Decision, and that it had discharged its onus of proof under sections 51 and 56 of the Tax Procedures Act (para 7b, 7c).
The Appellant contended the Respondent did not provide adequate reasons for confirming the assessment, contrary to Section 49 of the Tax Procedures Act and Article 47 of the Constitution on fair administrative action, and relied on Republic v. Commissioner of Domestic Taxes Large Taxpayers' Office ex-parte Barclays Bank of Kenya Limited (2012) eKLR (para 10a-d). It also argued the Respondent did not adhere to Section 31(8) of the TPA in issuing the additional assessment (para 10e), and that its VAT obligation had been suspended by the Respondent via public notice in September 2021, with reinstatement only in April 2024 following email communication in March 2024 (para 10f, 10g).
The Respondent's case was that the assessment arose from a compliance review revealing the Appellant was a non-filer for October 2021 to October 2023 (para 13), and that it computed undeclared sales resulting in principal tax payable of Kshs. 11,699,907.46 (para 14). The Respondent stated it relied on its best judgment because the Appellant failed to provide sufficient supporting records and did not discharge its burden under Section 56(1) of the Tax Procedures Act, citing Primarosa Flowers Limited vs Commissioner of Domestic Taxes [2019] eKLR and Republic v Kenya Revenue Authority Ex-Parte Bata Shoe Company (Kenya) Limited [2014] eKLR (para 15).
Court findings
On the validity of the Commissioner's decision, the Tribunal considered Section 51(10) of the TAT Act, which requires an objection decision to include a statement of findings on material facts and reasons for the decision (para 21). The Tribunal found that the Commissioner had provided a statement of findings, namely that the objection was rejected because the Appellant did not provide the documents requested of it, and held this met the minimum threshold required by law (paras 23, 29).
The Tribunal declined to read additional requirements into Section 51(10), citing Cape Brandy Syndicate v Inland Revenue Commissioners [1921] 1 KB 64 and Law Society of Kenya v Kenya Revenue Authority & Another (Petition No. 39 of 2017) [2017] KEHC 8539 (KLR) (paras 26-28).
On Section 31(8) of the TPA, the Tribunal found that nothing in that provision requires the Commissioner to inform a taxpayer how it issues an additional assessment, and that the additional assessments dated 26th August 2024 met the requirements of Section 31(8) (paras 31-32). It accordingly held the assessment orders and the Objection Decision were valid and lawful (para 33).
On whether the assessment was justified, the Tribunal noted that the assessment covered October 2021 to September 2023, and the VAT returns provided by the Appellant, all dated 10th October 2024, were filed well beyond the relevant VAT tax periods (paras 35-36). The email relied on to show placement on the special table was dated 15th March 2024, which fell outside the assessment period, and the Tribunal found this excuse not tenable (para 37).
The Tribunal further found that the Appellant did not provide invoices or receipts required under Section 17(2) and (3) of the VAT Act, nor plead or provide evidence that such documents were supplied to the Respondent (paras 38-39). Referring to Mburu v Commissioner of Domestics Taxes [2026] KECA 1606 (KLR), the Tribunal held that general, unsupported explanations cannot displace the Commissioner's assessment (para 40). It concluded that the Appellant failed to discharge its burden of proof under Section 56(1) of the TAT Act to prove, on a balance of probabilities, that the assessment was erroneous or unjustified (para 41).
Outcome
The Tribunal dismissed the appeal (para 42a).
The Respondent's Objection Decision dated 18th December 2024 was upheld (para 42b).
Each party was ordered to bear its own costs (para 42c).
Major issues / areas of contention
- Whether the Commissioner's Objection Decision dated 18th December 2024 was valid under Section 51(10)
- Whether the additional assessment dated 26th August 2024 met the requirements of Section 31(8) of the Tax Procedures Act
- Whether the Appellant's VAT obligation was suspended during the assessment period under Section 36 of the VAT Act, 2013 and Section 10 of the Tax Procedures Act, 2015
- Whether the Appellant discharged its burden of proof under Section 56(1) to show the assessment was erroneous
- Whether the Appellant held the documentation required under Section 17(2) and (3) of the VAT Act to support its input tax position